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British pound gains boost from BoE, dollar looks to inflation data

Berita 24 English -  The British pound held near a three-month high against the dollar on Friday, as rising expectations of an earlier than ...

Berita 24 English - 
The British pound held near a three-month high against the dollar on Friday, as rising expectations of an earlier than expected rate hike by the Bank of England weighed on the pound. At the same time, the US currency focused on upcoming inflation data.

The British pound held steady at $1.4203, following a 0.58 per cent gain on Thursday following comments from a Bank of England policymaker that the central bank is likely to raise interest rates well into next year.

Additionally, Gertjan Vlieghe noted that an increase could occur sooner if the economy recovers more quickly than expected.

The pound traded at 85.83 pence per euro against the euro, close to its five-week high of 85.615 pence per euro. The pound reached a three-year high of 156.02 yen against the yen.

The euro was trading at $1.2192, just below Tuesday's five-and-a-half-month high of $1.2266, as dovish comments from European Central Bank officials sapped its momentum ahead of its June 10 policy meeting.

The dollar surged to 109.85 yen, breaking out of a narrow range that had held for several weeks and reaching its highest level in nearly seven weeks.

The increase was likely caused by yen selling following MSCI's reshuffle of its standard stock index, which dropped nearly 30 Japanese names, analysts said. [ ] .T]

Concerns about a delay in Japan's economic recovery also weighed on the yen, as media reports indicated that Japan is considering extending a state of emergency in Tokyo and several other areas by three weeks, to June 20.

Additionally, the dollar benefited from rising US bond yields following a New York Times report that President Joe Biden will announce a $6 trillion budget for 2022 on Friday.

The proposal comes as the US economy appears to be reviving.

Americans filed more new unemployment claims than expected last week, falling to a seasonally adjusted 406,000, as businesses scrambled for workers to meet surging demand unleashed by a rapidly reopening economy.

"Given the recent initial claims figure, expectations are clearly building for a strong reading on next week's monthly payrolls data," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.

Before the payrolls data, the US inflation data due at 1230 GMT on Friday is a major focus, as a high reading could fuel expectations of Federal Reserve policy tightening.

Economists anticipate that core PCE (personal consumption expenditures) prices increased 2.9 per cent yearly in April, up from 1.8 per cent a month earlier.

While this is significantly higher than the Federal Reserve's target of 2%, economists anticipate that core inflation will gradually moderate later this year, allowing the Fed to maintain the current size of asset purchases for the time being.

Elsewhere, the offshore Chinese yuan traded at 6.3755 per dollar, up from a three-year high of 6.3679 overnight on growing expectations that the Chinese central bank is comfortable with a stronger currency in light of the country's economic recovery.

Bitcoin traded at $38,094, remaining relatively stable over the last 24 hours. The price of ether was $2,732.

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